Review of the year: month by month
16 December 2013
16 December 2013
18 October 2013
27 March 2013
1 May 2013
24 February 2014
The year will be remembered for redundancies and consolidation, as firms looked to cut costs and reduce overheads.
Here The Lawyer takes a look back at what has been a transformative year, from the collapse of Cobbetts and the pre-pack sale of Manches to Penningtons to the coming together of SJ Berwin and King & Wood Mallesons.
The year did not start well Redundancies, office closures, the fallout from the closure of Dewey & LeBoeuf and the spectacular collapse of Cobbetts marked the start of 2013. For those wanting the sector to move away from doom and gloom, the wait continued.
While SJ Berwin set the tone for its expansive year with the opening of an office in Luxembourg (3 January 2013), other firms were looking to cut costs by retrenching.
DLA Piper revealed plans to shut its Glasgow office as it moved to offload its defendant insurance groups following a consultation (24 January 2013). At the time DLA said it would transfer 10 partners to its Edinburgh office, where there were also 30 jobs available for fee-earners and staff. The firm had around 75 staff in its Glasgow base.
There would also be cuts to DLA’s insurance teams in Birmingham, Manchester and Sheffield, which the firm planned to sell to two separate entities.
Office closures on the domestic front did not stop DLA investing in growth overseas. The firm opened in South Korea office after getting approval from the country’s Ministry of Justice to practise international law there.
Eversheds also began the year by implementing further redundancies as it strived to adopt a new strategy, an element of which was to bring the UK and Asia groups closer together (7 January 2013).
After winning a second term in October 2012 (9 October 2012) Eversheds chief executive Bryan Hughes set his sights on global growth, telling The Lawyer: “You can have it both ways; you can be collegiate and profitable.” (21 January 2013).
At Eversheds global growth, it seems, could not be achieved without some cost-cutting. The firm put up to 166 positions at risk across the UK and Asia, and announced the closure of its Copenhagen office.
As part of the changes global managing partner Lee Ranson became interim Asia managing partner, replacing Nick Seddon, who left the firm.
Radical management changes may not always be popular, but they are better than facing imminent closure.
The collapse of US firm Dewey & LeBoeuf, which happened in May 2012, (29 May 2012), continued to send ripples across the Atlantic, with details of the financial fallout emerging.
The UK arm was landed with a £36.7m claim from Dewey’s US LLP, with administrators revealing that £40m was being sought by unsecured creditors (9 January 2013). The claim was “in respect of an inter-company position that arose prior to administration”, understood to be related to the UK LLP’s guarantee for its revolving credit facility and the private placement it issued in 2010. The battle continues.
Elsewhere, mounting speculation about the fate of Manchester firm Cobbetts was finally laid to rest when the firm formally appointed KPMG as its administrators (30 January 2013).
The firm, which had 242 lawyers and more than 551 staff, suffered a significant downturn in its trading performance in 2009 due to the economic climate and the drop in corporate and real estate deals (see box). With overdrafts and lending on the rise, the cashflow issue became too much to bear and the firm sought a buyer.
By the time the firm formally went into administration on 6 February DWF had agreed to acquire it in a pre-pack deal worth £3.8m (31 January 2013).
News of Cobbetts’ demise continued to dominate the news cycle as DWF stepped in to sweep up the leftovers a little more than a year after the two firms called off merger talks (31 January 2012). The move marked the start of a prolific year for DWF in which mergers and acquisitions helped catapult it up The Lawyer UK 200 rankings, with growth of 84 per cent, to £188m (6 June 2013).
It was by no means the only firm looking to bulk up and, or change structure in 2013. Howard Kennedy and Finer Stephens Innocent officially came together in February, creating HowardKennedyFsi (4 February 2013).
While those lawyers celebrated there was doom in other corners of the profession. At the bar, former 39 Essex Street barrister Rohan Pershad QC was convicted of tax fraud.
Pershad was found guilty of cheating the public purse after “deliberately” not paying £600,000 in VAT over a period of 12 years. The jury took almost 10 hours to convict him by a majority of 11-1 (11 February 2013). Later in the month Pershad, who only took silk in 2011, was jailed for three and a half years (26 February 2013).
Former Ince & Co partner Nathan ‘Andrew’ Iyer was sentenced in February to four years and eight months after being convicted of forgery and false accounting (7 February 2013). It came a year to the day after Iyer, who had claimed to be a charity hero, had been struck off by the Solicitors’ Disciplinary Tribunal (SDT) after he admitted stealing £3m from the firm (7 February 2012).
“Iyer showed complete disregard for those he defrauded and a disturbing willingness to use the serious matter of terminal illness to try and win an honour, including by faking a letter from an imaginary cancer sufferer,” investigating officer DC Mark Cross of the Metropolitan Police’s Central Fraud Squad said at the time (8 February 2013).
There was better news for legacy Herbert Smith, which opened its first standalone base in Germany a year after it ended its alliances with German firm Gleiss Lutz and Benelux firm Stibbe because the pair voted against a merger (24 November 2011). Gleiss partner Ralf Thaeter planned to join HSF on 1 April to help launch an office in Frankfurt. At the time the base was not expected to open until later in the second quarter of 2013 (13 February 2013).
Pinsents continued to diversify its offering with the launch of a contract lawyer service for clients. The new business, Vario, aimed to provide a hub of freelance lawyers who could be called on to help clients deal with spikes in activity or fill in gaps caused by staff absences (6 February 2013).
For legacy SJ Berwin growth would come from further afield in 2013. In February The Lawyer revealed the firm had sent a delegation of senior figures to Australia to seek a combination with a local firm. At the top of that shopping list was King & Wood Mallesons (20 February 2013).
March was a month of mergers: both mooted and abandoned.
Addleshaw Goddard and Nabarro called off merger talks after early-stage negotiations (6 March 2013) as Graham Stedman replaced Simon Johnston as Addleshaws senior partner at the start of the year (24 October 2012).
The merger between the two top 25 firms would have created a £280m firm, changing the landscape of the Top 20 significantly.
At the same time, Speechly Bircham was romancing Withers, with both firms looking to tie the knot. Together, the firms would have created a £170m private client firm with around 200 partners across the globe. The coupling was heralded as “the world’s biggest private client firm” by one market commentator and was seen as an opportunity for Speechlys to expand internationally, while Withers would benefit from Speechly’s more substantial corporate and real estate practices, but it later fell through as partners voted against the merger in May.
Meanwhile, the public sector was revelling in the joys of spring. South London councils Lambeth and Southwark thought they could save a cool £3m each by creating an alternative business structure (ABS) together (18 March 2013).
And it was not only in-house lawyers looking to diversify using an ABS licence. Schillings, the don of media boutiques, was also granted an ABS licence in March (1 March 2013).
With few growth opportunities on the high street and continuing downward pressure on rates it soon became clear that Cobbetts was not going to be the only casualty of the year.
Experience shows that when a firm goes into administration the consequences can be huge. No sooner had HL Legal bought up the debt recovery business Incaso from the now-defunct Cobbetts than it was issuing a redundancy consultation for those who joined the business (1 March 2013).
If hiring and firing is not your bag, why hire at all? Wannabe solicitors are finding it tougher than ever to get a training contract, let alone a job. With control firmly in employers’ hands, some trainees are left with little option but to take up short-term contracts.
And how much to pay trainee lawyers has been a theme of the year. It is fair to say that the number of available lawyer positions may be in decline, but this has done little to prevent salaries rising hugely. There was uproar when recruiter Edward Gibson was bold enough to suggest that NQ salaries should be capped at £50,000 (20 March 2013). How dare they, The Lawyer readers asked. Well, trainee nurses are only paid £14,200.
That said, there are big bucks to be made in the law, particularly if you are a heavyweight litigator who counts British Sky Broadcasting as a client.
Step forward former Herbert Smith Freehills (HSF) litigation heavyweight Ted Greeno, a stalwart who commanded mega-fees for the firm before quitting for US outfit Quinn Emanuel Urquhart & Sullivan (27 March 2013).
His was the ninth departure from the team (they included financial services regulatory chief Martyn Hopper, who joined Linklaters (3 September 2012). Jason Fox left for Bracewell Giuliani (5 March 2013) and Kevin Lloyd jumped ship to Debevoise & Plimpton (5 December 2012), raising questions about what impact the tie-up with Freehills would have on the firm in the longer term (8 April 2013).
As the 2012/13 financial-year drew to a close April saw the familiar round of promotions by UK firms. But the numbers being made up this year turned out to be smaller than in the past two years, with a drop of 15 per cent among the top 20 UK firms (7 May 2013).
All the magic circle save Freshfields Bruckhaus Deringer announced promotions in April – Allen & Overy (A&O) (11 April 2013), as seems to be traditional, kicking things off, followed by Linklaters (29 April 2013) and Clifford Chance (29 April 2013).
Meanwhile, salaries were under the microscope. Both A&O (23 April 2013) and Slaughter and May (30 April 2013) lifted salary freezes. The former gave trainees a rise for the first time since 2010, while the latter gave all its junior lawyers a pay hike for the first time since 2011. Both firms cited “the market” as the reason for the raises, commenting that they were monitoring what their competitors were doing.
That focus on trainees was reflected at the end of the month in our focus on retention rates among UK firms, as we examined the business imperatives for lawyers in keeping on their young talent (29 April 2013).
Money was also on SJ Berwin’s mind, with the firm finally paying out partner profits that were originally due in February (30 April 2013).
In the in-house world, April saw the announcement of two panel reviews and the results of a further two. In the UK, both Network Rail (19 April 2013) and the NHS (5 April 2013) confirmed shrunken legal panels. Infrastructure giant Amey said it was looking at instituting a panel (29 April 2013), as did Chinese bank ICBC (15 April 2013).
Back among the private practice firms, internationalisation continued – but not always smoothly. Baker & McKenzie sealed a high-profile merger in the UAE with local firm Habib Al Mulla & Co (17 April 2013). HSF made good on its promise to open in Germany (2 April 2013), but ended its Saudi Arabian association (8 April 2013). Also in Germany, Shearman & Sterling said it was consolidating in Frankfurt after a wave of exits (23 April 2013).
But April was not a month of many big lateral hires – although in an unusual move, Ashurst made a splash when it picked up A&O chief financial officer Brian Dunlop (29 April 2013). Dunlop replaced Nigel Morland, who stepped down from Ashurst’s board to work on integrating the firm’s merger with Australia’s Blake Dawson.
April is also the month when in-house counsel from across Europe gather at The Lawyer’s annual strategy summit in Lisbon. Delegates came from across the spectrum of businesses and discussed a range of hot topics affecting the legal market and the business world.
The state of the world economy was covered by keynote speakers, business consultant Stephen Archer and KPMG economics and regulation chairman Bill Robinson, while other sessions looked at the increasingly powerful role in-house lawyers are playing in their companies.
In May DLA Piper harked back to the pre-recession heydays by holding its annual partner meeting on a cruise ship. The firm allegedly paid $3.1m (£2m) for the luxury liner to take partners on a four-night Mediterranean cruise (3 May 2013). This was a little more than six months after the firm put 251 staff at risk of redundancy (13 November 2012).
Partners on board would get to try wine tasting, attempt rock climbing and, most certainly, enjoy a round of miniature golf. It could have been 2008, with echoes of the firm’s meeting aboard a Royal Caribbean cruise liner (31 March 2008).
For the rest, it was another month of austerity.
Berwin Leighton Paisner (BLP), Osborne Clarke, DWF and Wragge & Co all launched redundancy consultations, with BLP’s affecting 58 legal and 44 secretarial staff (14 May 2013), Wragges’ resulting in the voluntary redundancy of 26 staff (14 May 2013) and Osborne Clarke’s affecting 13 senior associates (15 may 2013). The announcement of the latter followed the news that one staff member would be made redundant in the wake of the firm’s move away from outsourcer Integreon (2 May 2013).
Meanwhile, lawyers and support staff in DWF’s Edinburgh and Glasgow offices were put on redundancy notice as part of the firm’s wider restructuring programme (14 May 2013). The restructuring was part of the 2013/14 budgeting process, lawyers and staff were told, and came amid a wider strategic review of commercial services and predicted workflows.
Merger mania also continued. Australia-listed Slater & Gordon unveiled plans to merge with Simpson Millar, Goodmans Law and the personal injury practice of Taylor Vinters (7 May 2013). On the same day defendant insurance firm Plexus Law, a subsidiary of Parabis, announced it would merge with Greenwoods (7 May 2013).
Other firms sought to relieve budget pressures by pulling poor performers down the lockstep. Ashurst moved six partners down from its so-called ’super-plateau’ – the first time it had removed members from the 65-point level since it was introduced in 2007 (7 May 2013).
While Ashurst deliberated over how to financially integrate with Australian firm Blake Dawson, legacy Herbert Smith was also having to deal with its own remuneration structure to bring it into line with Freehills.
Withers, meanwhile, put the brakes on its romance with Speechly Bircham, calling off merger talks.
Those in need of light relief wondered what the hell Coleen Rooney, wife of Manchester United star Wayne, was doing at Old Trafford holding a Linklaters umbrella. (13 May 2013). It turned out to be the ultimate unplanned PR stunt as the firm said she must have got it from a brand ambassador. What next, Miley Cyrus brandishing a Dundas & Wilson foam finger?
Back to those poor law students. For many, the prospect of going to law school seems a luxury only the rich can afford. But when £10,000-a-term Westminster School attempted to auction off a mini-pupillage for more than £700 it found itself in hot water with the Bar Standards Board (15 May 2013).
Travers Smith, meanwhile, found itself on the receiving end of a discrimination claim from former trainee Katie Tantum – who claimed she was not given a permanent job because of her pregnancy (17 May 2013).
While some sections of the market continued to show signs of recovery as the year went on, some firms were still dealing with the ramifications of the 2008 crash.
There was good news for Clifford Chance and HSF associates, with both firms implementing pay rises (5 June 2013), but other firms were taking a closer look at cost cutting – again.
Dundas & Wilson cancelled its vacation scheme just weeks before students were due to spend a fortnight at the firm, blaming “changes in the structure of the legal market” for the decision (5 June 2013). At the same time, it deferred its next two trainee intakes (4 June 2013).
Taylor Wessing, meanwhile, told 96 secretarial staff that they were at risk of redundancy as the firm overhauled the department (18 June 2012). All 96 secretaries in the firm’s City headquarters entered the consultation, with around 26 secretarial positions being cut.
The SRA confirmed what many already knew, that the profession is being forced to change to respond to client spending cuts. The regulator warned that as many as 160 UK firms were facing financial difficulties, with eight judged as being of “immediate risk” of collapse (14 June 2013).
That was not the only bleak message. News of the demise of Latvian insurer Balva came as a surprise to the 1,300 firms it provided professional indemnity insurance (PII) for (18 June 2013). Those firms were left at risk of having no insurance cover, prompting debate about whether firms should be using unrated underwriters (29 June 2013).
Barclays launched its own cost-cutting programme, looking to slash £2bn from its overall cost base of £20bn. The in-house department was not unaffected. The bank called in its lawyers for a summit. CEO Antony Jenkins and deputy general counsel Michael Shaw addressed advisers on the impact of the programme (24 June 2013).
Many firms look to low-cost centres to help take control of overheads. Ashurst, for example, opened a support centre in Glasgow (12 June 2013). Addleshaw Goddard, taking a different approach, launched a legal process-mapping initiative across 46 of the most common types of legal work (18 June 2013).
Global consolidations continued, with Norton Rose formally merging with Fulbright & Jaworski on 1 June to create Norton Rose Fulbright (2 June 2013). The firm granted just over 25 per cent of positions on its two key governance bodies to US partners, meaning legacy Fulbright & Jaworski was almost as well represented on the management groups as the UK.
SJ Berwin partners were treated to a trip to Marbella, where senior partner Stephen Kon set out details of what he believed would be a game-changing merger. It was the first time the partners got together to discuss the prospect of merging with Asia Pacific firm King & Wood Mallsons (7 June 2013).
It was also a busy month for The Lawyer. Not only did we launch two value-adding business intelligence reports, The Lawyer Asia Pacific 150 (17 June 2013) and The Lawyer Management (24 June 2013), we also announced the outcome of the annual Lawyer Awards.
Taylor Wessing took the top prize as Law Firm of the Year, while White & Case was named International Law Firm of the Year and Richard Vary of Nokia was awarded In-House Lawyer of the Year (28 June 2013).
July started positively, with firms posting year-end figures that apparently reflected a relatively stable market. Despite the predictions of impending doom at the start of the year, turnover among the Top 50 was seemingly on the rise (5 July 2013).
By the end of the month, however, the clouds were gathering again as it became apparent that the figures were not telling the whole story.
All magic circle firms but Clifford Chance posted revenue rises. Freshfields revealed the greatest hike with a 7.2 per cent jump, to £1.139bn (5 July 2013).
Linklaters claimed a 1 per cent like-for-like increase in global revenue to £1.195bn against a 6.5 per cent rise in average profit per equity partner (PEP) (5 July 2013). However, the latest unaudited revenue result represented a 1 per cent drop in the raw figure of £1.207bn in 2011/12, which itself was a rise of less than 1 per cent on 2010/11 (6 July 2012).
A&O saw a small revenue increase, just 0.8 per cent, from £1.18bn to £1.19bn (4 July 2013), while the last magic circle firm to report its financials, Clifford Chance, was also the only one to see a 2.5 per cent drop in revenue as well as a 9 per cent drop in PEP (8 July 2013).
Before long it became apparent that this was going to be another month of exits and headcount reductions.
BLP confirmed that 102 support staff had been made redundant but declined to comment on how lawyers had been affected (5 July 2013). It later emerged that Managed Legal Services head Patrick Somers had left the firm amid its restructuring. He joined DLA Piper in September (16 September 2013).
The job cuts continued, with DAC Beachcroft slashing five fee-earning positions following the restructure of its London employment and pensions team (17 July 2013).
Hill Dickinson cut 14 partner roles and 69 staff positions following a consultation (30 July 2013) and a closer look at Eversheds revealed the firm had lost around 45 partners since the start of January 2012 (8 July 2013).
July also marked the end for troubled Midlands firm Challinors, which called in administrators and went on to be sold off in pre-pack deal (24 July 2013).
There were red faces at Russells after partner Chris Gossage revealed that Harry Potter author JK Rowling was the mysterious Robert Galbraith, author of detective novel The Cuckoo’s Calling. (19 July 2013).
Gossage told his wife’s best friend Judith Callegari about the Potter writer’s pseudonym during a private conversation. Callegari then decided to tweet writer India Knight, passing on the information. Rowling was not amused and issued High Court proceedings against the firm, instructing Keith Schilling of Schillings on the case.
The author accepted “substantial damages” from the firm, which were donated to The Soldiers’ Charity and to reimburse the claimant’s costs.
Over at SJ Berwin everything was about to change. After flying out to Marbella to discuss the prospect of merging with King & Wood Mallesons, partners threw their weight behind the deal and voted in favour of pushing ahead with a November merger (31 July 2013).
As most lawyers sloped off to the Algarve or the south of France for two weeks of wine and waves it was all go for Slater & Gordon, which managed to push through not one but two bolt-ons in August.
Consolidation of the personal injury market was a dominant theme of the second half of the year. All eyes were on Slater & Gordon in the summer months as it completed the acquisition of Taylor Vinters’ personal injury practice (19 August 2013), announced the planned takeover of Fentons (21 August 2013) and moved into Liverpool with the acquisition of Goodmans Law (30 August 2013).
Meanwhile, partners at Hill Dickinson and Withers may have been wishing they’d booked a cheap week at a campsite in Ilfracombe rather than splashing out on business class flights to Disney World, as both firms issued cash calls.
Hill Dickinson requested that partners contribute £2.8m to stabilise its balance sheet after a period of heavy investment in which it launched in Monaco (5 February 2013), invested in new premises in London’s Broadgate Tower and spent in excess of £2m on a new practice management system (7 August 2013).
Withers asked partners to pay out as much as £5,000 per point after holding partner profits for more than a year (23 August 2013).
Midlands firm Challinors shut up shop following a major battle with a former client who slapped a bankruptcy petition on the firm (15 August 2013). A few weeks later it confirmed the loss of 46 jobs (23 August 2013), with the remainder of the business divided up between 14 firms (27 August 2013). Clarke Willmott, Shoosmiths and Weightmans all took a slice of the pie.
While BPP Law School was awarded university status (8 August 2013) there was yet more bad news for students, with A&O revealing plans to cut its trainee intake from 2015 (15 August 2013). It was a trend that had an effect across the board, from the larger City firms to the specialist boutiques. Media boutique Wiggin said it would scrap its trainee intake altogether, with chief executive John Banister saying clients would rather do the work themselves (1 August 2013).
It was back to school in September, with the dog days of August and any thoughts of sandy beaches or sangria firmly behind the worker bees of the UK’s legal market.
Our first issue back after the fabulous summer of sun was dedicated to a series of bold predictions about the future look, shape and feel of the legal market, national and international. They included: seven more transatlantic mergers; no more magic circle; the disappearance of 25 of the current Top 100 by 2018; and at least five firms going spectacularly bust (2 September 2013). And that was just for starters.
The first week back also brought an update on North East personal injury firm Winn Solicitors. Back in January The Lawyer revealed that primary partner, Jeff Winn, was trousering around £10m (4 February 2013). In September Winn secured external investment (4 September 2013) in a deal that again highlighted the consolidation in the insurance market.
It was the turn of the premium end of the corporate market to get an injection of energy as the Government confirmed the privatisation of state-owned Royal Mail, gifting Freshfields, Linklaters and Slaughters roles on the mega-IPO (12 September 2013).
Mid-month coincided with the fifth anniversary of the collapse of Lehman Brothers (20 September 2009), an event that led to numerous firms including Weil Gotshal & Manges, Linklaters and Milbank garnering millions of pounds in fees.
And there was another bad day for a bank when just days later RBS told the High Court it was going to have to dig deep to defend a potential £4bn group action from former shareholders (18 September 2013). HSF stepped up for the bank, telling the court it had managed to a run up a legal bill of £42m defending shareholder action.
Slater & Gordon was back in the news, once again moving to consolidate the consumer legal market across the north. The Lawyer revealed that Slater & Gordon’s shopping list included Manchester heavyweight Pannone, although it wasn’t going to acquire the entire business (20 September 2013). While both firms refused to comment on the move initially, Pannone partners voted in favour of the deal (28 November 2013).
Change was also afoot in-house where, with Clifford Chance missing out on a spot on Aviva’s new group and UK panel (30 August 2013). It was yet another review run by an in-house legal department looking to make savings. Firms were asked to make pledges including a commitment to cut hourly rates by at least 15 per cent until the end of December 2015 (23 September 2013).
Ashurst continued its march into the South East Asia market after partners voted in favour of full financial integration with legacy Blake Dawson, now known as Ashurst Australia (26 September 2013). The merger transformed Ashurst from a £323m to a £550m turnover firm and triggered a vote on who should take up the newly created chairman role is expected to follow.
As ever, market expansion was counterbalanced with news of consolidation. London firm Manches had watched net profit dwindle to a 10-year- low of £2.15m while many rainmakers had walked out in recent years. The firm had been on the hunt for a merger for many years (it even mooted a tie-up with Halliwells (21 September 2009), the salvation, it seemed, was to merge with Penningtons (24 September 2013).
Meanwhile, Freshfields received a resignation from managing partner Ted Burke, who after pioneering the firm’s major success, was planning to head in-house to join Arclight Capital Partners as general counsel and chief operating officer (30 September 2013).
And while it was a long time coming, BLP chose the end of September to finally unveil its dismal profit figures, confirming a 39 per cent plummet in average profit per equity partner (30 September 2013).
Burke’s move away from Freshfields was echoed by a flurry of partner moves that characterised October (30 September 2013).
Within days, Reed Smith global head Greg Jordan quit to join PNC Financial Services Group as legal chief (3 October 2013). Meanwhile, Field Fisher Waterhouse of counsel Thierry van Innis quit to launch a brand new IP boutique, Van Innis & Delarue, with A&O senior associate Dieter Delarue (2 October 2013).
Van Innis’ lack of partner status may just have exempted him from the extraordinary 18-month notice period dealt to A&O’s privacy group head Eduardo Ustaran who announced he would ultimately be moving to Hogan Lovells (10 October 2013).
While these upheavals are noteworthy, private equity moves were the theme of the month. The exodus began with up-and-coming Clifford Chance partner Tom Evans moving to Latham & Watkins (9 October 2013).
Soon enough, it emerged that big-hitting private equity stars Richard Youle and Ian Bagshawe had quit Linklaters for new posts at White & Case (17 October 2013). Private equity partner Ed Harris moved from SJ Berwin to Hogan Lovells (22 October 2013), while BLP corporate finance partner Michael Weir was reunited with former global private equity head Raymond McKeeve at Jones Day (8 October 2013).
Freshly merged Ashurst elected litigator Ben Tidswell into its newly-formed chairman role, a move that cost senior partner Charlie Geffen the leadership post he held since 2008 (16 October 2008).
It was also a hectic month for in-house lawyers – particularly those at financial institutions – who were busy rejigging their panels to save their pennies.
The Lawyer revealed that Citigroup was in the process of shrinking its Emea panel (28 October 2013), Hiscox trimmed its claims roster from 45 to 13 firms (31 October 2013), while Bank of Tokyo Mitsubishi UFJ also revealed it was in the process of cementing its first-ever UK panel of advisers (29 October 2013).
Nationwide kicked off its delayed panel review (9 October 2013) just weeks before its general counsel Liz Kelly announced she would be resigning from the bank (22 October 2013). Total’s senior vice-president and general counsel Peter Herbel also handed in his notice, announcing he’d retire from the oil giant by the end of the year (23 October 2013).
During October firms continued to pop up in all sorts of weird and wonderful locations – White & Case in Kazakhstan (1 October 2013), SJ Berwin set its sights on Riyadh (28 October 2013) and Eversheds in Erbil, Iraq (21 October 2013). Osborne Clarke finally launched its long-touted Manhattan base (25 October 2013), while Boies Schiller opened its first non-US office in London with former Bingham McCutchen partner Natasha Harrison at the helm. (7 October 2013)
Others turned to tie-ups for growth. Dentons, for example, began merger talks with US firm McKenna Long & Aldridge (1 October 2013).
It also emerged that, rather than merging with Penningtons, Manches had voluntarily gone into pre-pack administration (14 October 2013), as the cash pressure had become too much to bear (11 November 2013).
In Manchester, tensions between Pannone and Slater & Gordon threatened to boil over regarding the details of the pair’s joint venture (21 October 2013).
Slater & Gordon had more luck bolting on £3m industrial disease firm John Pickering and Partners (24 October 2013), while fellow insurance giants Clyde & Co’s joint venture saw it become the first international commercial firm to have a presence in South West China (30 October 2013).
There were red faces at US firm Paul Hastings, where litigator Tom O’Riordan was forced to leave because he had made up his CV. O’Riordan claimed to have been educated at Oxford before gaining a masters from Harvard. He also claimed to be a member of the New York and Irish bars. None of this turned out to be true and O’Riordan was forced to leave (4 October 2013).
Meanwhile, Ashurst partners voted to oust Charlie Geffen from its management roster, opting to appoint litigator Ben Tidswell into the newly established chairman role (16 October 2013).
November was a month of mergers and wind-ups, kicking off with the SJ Berwin-King Wood Mallesons consolidation and ending in two more unions.
SJ Berwin formalised the merger with King Wood Mallesons on the 1 November (1 November), snazzily branded SJ Berwin King Wood Mallesons.
Days later Ashurst unveiled its post-merger board (5 November) and Slater & Gordon had officially entered merger talks with Pannone (11 November). Before the they could tie the knot – which they did on 28 November (28 November) – Lawrence Graham and Wragge & Co had joined in, confirming talks to combine and create a £170m firm (18 November).
Not everyone buddied up though – after a series of court hearings and failure to secure a merger partner the High Court shut down Follett Stock due to unpaid tax bills (6 November).
Life after merger also proved tricky for HSF, which lost the bulk of its legacy Freehills team in Singapore one year after the tie-up (21 November).
It was not the only mass exit – DLA Piper lost a 23-lawyer team to HWL Ebsworth in Sydney (6 November). The firm followed that news by naming two new practice heads for Australia and the Asia Pacific region (8 November).
There were also notable elections at Clifford Chance, which reappointed David Bickerton as London chief (26 November) and elected corporate head Matthew Layton to the top spot as managing partner (27 November).
Elsewhere, Dentons’ former co-chief executive Howard Morris popped up at Morrison Foerster as co-head of business restructuring and insolvency based in London (18 November).
In the courts, big-ticket banking litigation was the order of the day all the talk was around costs. Sebastian Holdings was ordered to pay £51m indemnified costs to Deutsche Bank (13 November) on top of a £146m bill (12 November). That followed a less positive result earlier in the month, when the bank lost a landmark appeal over Libor-related claims bought against it.
By the end of the month half-year results were trickling in, with – surprise surprise – the top performers piping up first. DWF stormed in with a revenue rise of 57.5 per cent (18 November), followed by A&O with a 7.5 per cent increase (20 November), Osborne Clarke with 12 per cent (22 November) and Simmons & Simmons with an 8 per cent hike (20 November).
Perhaps fuelled by early mince pies and mulled wine, there was a flurry of activity in December.
For starters, law firms across the globe were busily gifting various senior lawyers shiny, new management positions. CMS Cameron McKenna began by electing Penelope Warne as its first female senior partner, replacing former managing partner Dick Tyler (2 December 2013).
Clayton Utz appointed Sydney-based litigator Robert Cutler as its new chief executive partner (10 December 2013), while Linklaters launched Greater China and global litigation head Marc Harvey into its Asia managing partner role (2 December 2013).
Closer to home, Ashurst appointed Simon Beddow as its new co-head of corporate, commercial and competition – to fill the shoes of former global head Stephen Lloyd (9 December 2013). Meanwhile, Lloyd was voted in as A&O private equity co-head.
While these firms tweaked their hierarchy, others were preoccupied with taking steps into new jurisdictions.
Eversheds, for example, strode into South Africa and Tunisia via tie-ups with Mahons Attorneys and El Heni (4 December 2013). Pinsent Masons bolted Parisian tech firm Ichay & Mullenex Avocats onto its collection (9 December 2013), while DAC Beachcroft merged with its Colombian alliance firm to trade under the title DAC Beachcroft Colombia (2 December 2013).
Things were no less quiet on the European front, as Belenux firm De Brauw Blackstone Westbroek (5 December 2013) and German firm Hengeler Mueller (4 December 2013) – best friends with Slaughters – both opted to open their doors in Shanghai.
Not to be left out, Osborne Clarke announced the imminent opening of its Amsterdam office – its fourth new European outpost in a year (9 December 2013).
No doubt these firms will have their fingers crossed that expansion doesn’t lead to job cuts, having witnessed Pannone putting more than 100 people on notice of redundancy after its tie-up with Slater & Gordon (10 December 2013).
In the run-up to Christmas a trio of firms tinkered with their remuneration systems – Slaughters divvied out its first ever discretionary bonuses (2 December 2013), Linklaters introduced a new merit element to its associate lockstep (3 December 2013), and HSF brought in a modified lockstep to firm up its post-merger integration (9 December 2013).
When it comes to cash, DLA Piper’s litigators must feel proud at the end of 2013. The firm topped The Lawyer’s Global Litigation Top 50 for yet another year – the only firm worldwide to break into $1bn territory thanks purely to its disputes practice (9 December 2013).
The festive feeling of togetherness appeared to have grabbed the market last week when Wragges and Lawrence Graham partners voted in favour of a £170m merger to create Wragge Lawrence Graham & Co (11 December 2013). CMS Cameron McKenna looked to Scotland for its bold move, agreeing to acquire Dundas & Wilson. The resulting brand is yet unknown (12 December 2013).
Hogan Lovells closed the year with the announcement that co-CEOs Warren Gorrell and David Harris will step down in June (11 December 2013).
Significant change lies ahead.
Europe: struggling by
Our annual examination of the fortunes of Europe’s top 100 independent firms was another sobering affair this year. While German and Norwegian firms all had solid financial years in 2012, and German recruitment was buoyant, in most jurisdictions stability was the best that could really be hoped for.
Iberian firm Garrigues remains the largest in Europe, despite seeing a drop in 2011/12 revenue, with France’s Fidal in second place. The top 10 is still dominated by German and Spanish firms.
There was little change in the make-up of the European 100, although next year’s edition will see a new top 10 entrant after the merger of Salans with SNR Denton and Fraser Milner Casgrain at the end of March 2013.
The other major development was the creation of a four-way alliance between Italy’s Chiomenti, Iberian firm Cuatrecasas Gonçalves Pereira, Gide Loyrette Nouel in France and legacy Herbert Smith’s former German ally Gleiss Lutz. The network, modelled along the same lines as Slaughter and May’s ‘best friends’ alliance, is intended to help the quartet be more competitive in a market that continues its consolidation.
Cobbetts: the dream that died
The collapse of Cobbetts in January (30 January 2013) was a long time coming, despite the firm hiring right up to the last minute (10 December 2012). When the firm called in the administrators it was home to 242 lawyers and more than 551 staff.
In a bizarre twist of fate it was DWF, the firm that had called off mergers talk with the Manchester stalwart a year earlier (31 January 2012), that ended up being the big winner in the calamitous affair. The firm moved in to acquire its former rival (31 January 2013), honouring Cobbetts’ training contracts (7 February 2013). But there was further change afoot.
Within six weeks DWF had imposed a two-year lock-in for legacy Cobbetts partners (4 March 2013) and embarked on a redundancy consultation, cutting 38 roles from its support team, with a further 21 put into consultation (27 March 2013).
There was also bleak news for those who were part of former debt recovery business Incasso, which was acquired by HL Legal. The firm made 44 staff redundant in May following a consultation involving 52 staff (10 May 2013).
Asia: international battleground
Asia remains a land of opportunities as well as a key battleground for international firms. Everyone is jostling for position in the fast-developing but extremely competitive markets. New office openings were the big news in 2013.
China, the traditional focus for international firms, continues to attract newcomers. Beijing attracted 10 international firms in the past 12 months including: Ashurst, Berwin Leighton Paisner, Clyde & Co, Gibson Dunn and Kirkland & Ellis.
Clyde & Co extended its footprint to Chongqing after forging an alliance with Chinese firm Westlink (30 October 2013).
Despite signs of expansion, many international firms have taken a good look at their position in the country and some have retrenched because it is so hard to maintain a strong profit margin (30 September 2013). Vinson & Elkins, for example, closed its Shanghai office in July (12 July 2013).
In Singapore, just four of the 23 foreign firms that applied for the Qualifying Foreign Law Practice (QFLP) licence succeeded (12 February 2013).
In Indonesia, although foreign firms are barred from opening offices on the ground, many have turned to local strategic alliances to tackle the market. DLA Piper, Squire Sanders, Taylor Wessing and White & Case have all tied up with Jakarta firms.
The same trend is in evidence in Myanmar, the final frontier in South East Asia. Stephenson Harwood was the first UK law firm to enter the market after striking an association deal with local U Tin Yu & Associates (8 May 2013).
In reverse fashion, Asia-headquartered firms are starting to make their presence felt in the global market.
The Australian domestic market has suffered a noticeable contraction over the past 12 months. Firms are responding by adjusting their staffing levels.
This year also saw two newly merged Anglo-Australian firms, Ashurst (26 September 2013) and Herbert Smith Freehills (9 December 2013), finally achieve financial integration after overcoming numerous challenges.
Global litigation powerhouse Quinn Emanuel Urquhart & Sullivan opened in Sydney in May (10 May 2013) and Pinsent Masons has recently hired Maddocks chief executive David Rennick to lead a review of growth opportunities in Australia (3 December 2013).
Judging by the year just passed, the highly dynamic Asia Pacific region will not disappoint in 2014.
ABS: insurers take up the challenge
Many predicted that the emergence of the alternative business structure (ABS) sector would be a slow burner and they were proved right. But in 2012 the SRA issued 68 ABS licences compared with 144 in 2013 – a 112 per cent increase.
Management structures have been reformed, non-legal entities have been approved to provide reserved activities for the first time, and private equity investment has turned traditional firms into competitive commercial entities.
We are yet to see other big supermarket chains follow the lead set by the Co-op’s entry via Co-operative Legal Services (CLS) (24 March 2012), possibly because CLS looks to be struggling to meet the targets it set for itself (15 October 2013).
There has, however, been an influx of entrants from the insurance sector, while many in the public sector are considering making use of the legislation to help save costs.
Insurance group Ageas became one of the first insurers to make a move in April through a partnership with Cardiff’s New Law (4 April 2013). FTSE 100 insurer Admiral followed suit via two ABS joint ventures, with Bristol-based claims specialist Lyons Davidson and Cardiff compensation firm Cordner Lewis (8 April 2013).
Direct Line Group is also in the process of becoming ABS-approved, with plans to enter into the market in partnership with Parabis (16 July 2013). Motoring association the AA also made its move, through a joint venture with Lyons Davidson (5 November 2013).
With continuing consolidation in the insurance market, the arrival of players on this scale introduces competition that traditional law has not seen before.
And as if that’s not enough, Ernst & Young became the first of the Big Four accountants to moot a legal services launch (9 September 2013), perhaps heralding the next wave of entrants from another market that already been through its revolution.
Deals: the markets strike back
2013 was widely hailed as the year the corporate markets would make a comeback. And in many ways it was a turning point – quarter on quarter, the M&A markets creaked back to life, and by November the equity capital markets were at a four-year high. Here are some of the deals that made us sit up and take note.
Vodafone / Verizon
Verizon Communications’ £84bn purchase of Vodafone’s 45 per cent stake in Verizon Wireless was comfortably one of the world’s biggest ever deals. In fact, it was the third-biggest transaction between two companies in history.
Hinkley Point C
An altogether different kettle of fish, as Herbert Smith Freehills (HSF) took a key role advising on French energy company EDF’s £16bn investment in Hinkley Point C – the UK’s first new nuclear power plant for a generation.
HSF advised long-standing client EDF, while Slaughter and May took a role advising the Department of Energy and Climate Change on the ground-breaking energy deal (21 October 2013).
Royal Mail IPO
The year was a watershed for equity capital markets, with withdrawn IPOs at their lowest level since 2005. A number hit the headlines – Merlin Entertainments and Esure, for example – but national treasure Royal Mail attracted more controversy than most as critics griped that it was undervalued.
Slaughters advised Royal Mail on its flotation, while Freshfields Bruckhaus Deringer was instructed by the Department for Business, Innovation and Skills. Linklaters advised the underwriters Goldman Sachs and UBS (12 September 2013).
Lloyds and Barclays share offerings
Barclays launched a bumper £5.8bn rights issue in September – the world’s largest rights issue by a bank since 2009. Clifford Chance and Sullivan & Crowell advised the bank, while Freshfields was instructed by the bookrunners (18 September 2013).
The same Freshfields team was kept busy by Lloyds Bank’s first steps towards reprivatisation, achieved through the sale of a 6 per cent stake, raising £3.2bn. On that ground-breaking deal, Slaughters advised UK Financial Investments – the Treasury unit managing the Government’s stakes in RBS and Lloyds (17 September 2013).
US firms in London: all jolly swell
This was the year the Americans rediscovered their love for London. In particular, the game-plan was primarily one of City launches by small but beautifully formed boutiques.
The year kicked off with the London entry – or more specifically re-entry – of Texas oil and gas powerhouse Bracewell & Giuliani (15 January 2013).
The Houston-headquartered firm picked up two energy lawyers including Simmons & Simmons partner Julian Nichol for the January launch. This was followed later in the year by Herbert Smith Freehills’ finance partner Jason Fox, who joined as senior partner (5 March 2013). Morgan Lewis & Bockius partner Martin Stewart-Smith was appointed in June (25 June 2013) and Clifford Chance energy construction partner Tracy London in November (6 November 2013) – the US firm’s eighth partner hire in the year.
Few firms were quite so aggressive in their hiring, but in a few short months another Texas energy player had at least followed suit in terms of making itself visible in London, when Andrews Kurth hired partner Peter Roberts to spearhead its City office. Roberts was Andrews Kurth’s first English law partner (16 May 2013) and had previously been general counsel at Centrica Energy (24 September 2007), a partner at Jones Day and also at legacy Denton Hall.
As the summer drew to a close Andrews Kurth beefed up its London office with the hire of a three-strong arbitration team featuring partner Melanie Willems from Chadbourne & Parke (16 September 2013).
US litigation powerhouse Boies Schiller & Flexner also launched its first non-US office in London during the summer, handing the reins to Bingham partner Natasha Harrison (7 October 2013), a member of The Lawyer’s Hot 100 in 2011 for her work advising bondholders on the restructuring of Polish conglomerate Elektrim (22 October 2010).
And completing the Yankee picture, Mississippi-based Butler Snow also popped up in London with an office staffed by lawyers splitting their time between the firm’s Greater Jackson office and featuring former Withers partner and US tax partner Kurt Rademacher (28 May 2013).